World gold price plummets, lowest in two weeks

Gold prices fell sharply in the trading session last night, reaching the lowest level in two weeks. The main reason is profit-taking activities from short-term futures traders.

Long-time market followers often mention an old rule: "The bull market needs to regularly have new information to continue going up". However, gold has not received much positive news recently, although there are still some factors that help gold prices not fall too much.

Meanwhile, silver prices also decreased slightly as buyers are gradually losing their technical strength. Gold contracts in April are currently down 27.9 USD to 2,902.3 USD/ounce. The March silver contract fell by 0.097 USD to 32.175 USD/ounce.

Asian and European stock markets traded in opposite directions last night. US stock indexes tended to open higher in the trading session in New York.

Risk sentiment improved after Nvidia announced profit-taking above expectations on Wednesday afternoon and issued a positive forecast. Previously, the company's stock had fallen for several weeks due to concerns about future spending on artificial intelligence.

Investors in US government bonds are starting to bet that the US Federal Reserve (FED) will soon have to shift from concerns about persistent inflation to concerns about slowing economic growth, Bloomberg said.

Today (Friday, February 28 - local time), the US will release the most important economic data of the week - the January personal income and spending report, including the personal consumption expenditure (PCE) price index.

The personal income, spending report and especially the US personal consumption expenditure (PCE) price index are considered the favorite inflation measure of the US Federal Reserve (FED). Therefore, the results of this report could have a strong impact on monetary policy expectations and thereby directly affect gold prices.

The PCE index is forecast to increase by 2.5% over the same period last year, lower than the 2.6% increase in the December report. If PCE increases correctly or lower than forecast, this shows that inflation is cooling down, increasing the possibility of the FED keeping or cutting interest rates in the coming time. Low interest rates often weaken the US dollar and bond yields, making gold more attractive as a safe-haven asset. At that time, gold prices may recover or increase sharply.

If the PCE is higher than expected (over 2.5%) it will show that inflation is still persistent, increasing the possibility of the Fed continuing to keep interest rates high or even tightening monetary policy. High interest rates increase the opportunity cost of holding gold, while pushing the USD and bond yields up, putting downward pressure on gold prices.

Gold contracts in April are still having a short-term advantage, but the increase on the daily chart has slowed down. The bull market aims to push prices up and maintain above $2,974/ounce - this is an important resistance level. On the contrary, the sellers want to reduce prices below the important support level of 2,800 USD/ounce.

In the outside market, the USD index increased slightly. Nymex crude oil prices also rose, trading around 69.25 USD/barrel. The yield on the 10-year US Treasury note is currently at 4.308% and is trending down.